Dolby Laboratories, Inc. (NYSE:DLB) today announced the Company's financial results for the fourth quarter and fiscal year ended September 26, 2008.
For the fourth quarter, Dolby reported total revenue of $163.1 million, compared to $129.0 million for the fourth quarter of fiscal 2007, an increase of 26 percent. Fourth quarter net income was $48.6 million, or $0.42 per diluted share, compared to $44.2 million, or $0.39 per diluted share, for the fourth quarter of fiscal 2007.
For fiscal year 2008, Dolby reported total revenue of $640.2 million, compared to $482.0 million for fiscal year 2007, an increase of 33 percent. Net income for fiscal year 2008 was $199.5 million, or $1.74 per diluted share, compared to $142.8 million, or $1.26 per diluted share, for fiscal year 2007.
Net income for the fourth quarter and fiscal year 2008 reflects stock-based compensation expense of $5.5 million and $22.7 million, respectively, compared to $5.1 million and $19.8 million for the same periods in fiscal 2007.
Net income for the fourth quarter and fiscal year 2008 also reflects charges related to the amortization of intangibles of $3.1 million and $12.5 million, respectively, compared to $1.3 million and $3.3 million for the same periods in fiscal 2007.
"Fiscal 2008 was a strong year for us, as we continued to benefit from the adoption of Dolby technologies globally," said Bill Jasper, President and Chief Executive Officer of Dolby Laboratories. “We finished fiscal 2008 with excellent profitability, a strong balance sheet, a global brand, and a continued focus on driving the adoption of existing and new technologies across our markets.”
Guidance
Dolby expects fiscal 2009 revenue to be $660 million to $720 million. Net income is expected to be $184 million to $208 million. Earnings per diluted share are expected to be $1.57 to $1.77. Included in Dolby’s fiscal 2009 earnings guidance is approximately $5.0 million in estimated restructuring charges for the consolidation of manufacturing operations. The impact of this restructuring charge on net income is approximately $3.0 million, or $0.03 per diluted share. While under FAS 123R, stock-based compensation expense may vary based on factors such as stock price or volatility, Dolby expects stock-based compensation expense for the full year to be approximately $25 million. In addition, Dolby expects charges related to the amortization of intangibles for fiscal 2009 to be approximately $13 million.
The Company's Conference Call Information
Members of Dolby management will lead a conference call open to all interested parties to discuss Dolby Laboratories’ Q4 and fiscal 2008 year-end financial results at 2:00 p.m. PT/5:00 p.m. ET, Thursday, November 6, 2008.
Access to the teleconference will be available over the Internet from http://investor.dolby.com/medialist.cfm or by dialing 888-205-6875. International callers can access the conference call at 913-981-5582.
A replay of the call will be available beginning at 5:00 p.m. PT on November 6, 2008 until 9:00 p.m. PT on November 13, 2008 at 888-203-1112 (international callers can access the replay at 719-457-0820) using confirmation code 1214655. An archived version of the teleconference will also be available on www.dolby.com.
Forward-Looking Statements
Certain statements in this press release, including statements relating to Dolby's expectations regarding revenue, net income, earnings per diluted share, stock-based compensation expense and charges relating to the amortization of intangibles, for the fiscal year ending September 25, 2009, and the expected future benefits from our global brand and driving adoption of our existing and new technologies, are “forward-looking statements” that are subject to risks and uncertainties. These forward-looking statements are based on management’s current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those projected. The following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking statements: risks associated with trends in the markets in which Dolby operates, including trends related to DVD and Blu-ray Disc™, broadcast, personal computer, gaming, mobile, or portable device markets, and trends relating to the development of additional and newer markets for Dolby technologies; general economic risks both domestically and internationally; the timing of Dolby's receipt of royalty reports and/or payments from its licensees; Dolby’s accuracy of calculation of royalties due to its licensors; Dolby’s ability to develop, maintain, and strengthen relationships with industry participants; Dolby’s ability to develop and deliver innovative technologies in response to new and growing markets in the entertainment industry; competitive risks; risks associated with conducting business in China and other countries, including countries that have historically limited recognition and enforcement of intellectual property and contractual rights; risks associated with the motion picture industry generally; the development and growth of the market for digital cinema and digital 3D and Dolby’s ability to successfully penetrate this market; Dolby’s ability to expand its business generally, and to expand its business beyond sound technologies to other technologies related to digital entertainment delivery, including acquiring and successfully integrating businesses or technologies; and other risks detailed in Dolby’s Securities and Exchange Commission filings and reports, including the risks identified under the section captioned “Risk Factors” in its most recent Quarterly Report on Form 10-Q. Dolby disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.
About Dolby Laboratories
Dolby Laboratories (NYSE:DLB) is the global leader in technologies that are essential elements in the best entertainment experiences. Founded in 1965 and best known for high-quality audio and surround sound, Dolby® innovations enrich entertainment at the movies, at home, or on the go. Visit www.dolby.com for more information.
Dolby and the double-D symbol are registered trademarks of Dolby Laboratories. All other trademarks remain the property of their respective owners. S08/20618 DLB-F
| DOLBY LABORATORIES, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| Fiscal Quarter Ended | Fiscal Year-to-Date Ended | |||||||||||||||
September 28, | September 26, | September 28, | September 26, | |||||||||||||
| (unaudited) | ||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| Revenue: | ||||||||||||||||
| Licensing | $ | 103,305 | $ | 137,756 | $ | 387,117 | $ | 537,363 | ||||||||
| Product sales | 19,617 | 18,586 | 67,487 | 72,284 | ||||||||||||
| Services | 6,041 | 6,788 | 27,424 | 30,584 | ||||||||||||
| Total revenue | 128,963 | 163,130 | 482,028 | 640,231 | ||||||||||||
| Cost of revenue: | ||||||||||||||||
| Cost of licensing | 2,151 | 3,623 | 28,438 | 15,802 | ||||||||||||
| Cost of product sales (1) | 9,978 | 9,806 | 34,497 | 39,455 | ||||||||||||
| Cost of services (1) | 2,860 | 3,120 | 11,330 | 12,520 | ||||||||||||
| Total cost of revenue | 14,989 | 16,549 | 74,265 | 67,777 | ||||||||||||
| Gross margin | 113,974 | 146,581 | 407,763 | 572,454 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative (1) | 50,536 | 62,815 | 178,802 | 224,090 | ||||||||||||
| Research and development (1) | 12,459 | 17,082 | 44,109 | 62,080 | ||||||||||||
| Gain on settlements | (250 | ) | - | (2,100 | ) | (499 | ) | |||||||||
| Total operating expenses | 62,745 | 79,897 | 220,811 | 285,671 | ||||||||||||
| Operating income | 51,229 | 66,684 | 186,952 | 286,783 | ||||||||||||
| Other income, net | 5,346 | 4,750 | 22,464 | 15,019 | ||||||||||||
| Income before provision for income taxes and controlling interest | 56,575 | 71,434 | 209,416 | 301,802 | ||||||||||||
| Provision for income taxes | (12,064 | ) | (22,254 | ) | (65,131 | ) | (100,770 | ) | ||||||||
| Income before controlling interest | 44,511 | 49,180 | 144,285 | 201,032 | ||||||||||||
| Controlling interest in net income, net of tax | (353 | ) | (621 | ) | (1,454 | ) | (1,574 | ) | ||||||||
| Net income | $ | 44,158 | $ | 48,559 | $ | 142,831 | $ | 199,458 | ||||||||
| Basic earnings per share | $ | 0.40 | $ | 0.43 | $ | 1.31 | $ | 1.79 | ||||||||
| Diluted earnings per share | $ | 0.39 | $ | 0.42 | $ | 1.26 | $ | 1.74 | ||||||||
| Weighted-average shares outstanding (basic) | 110,112 | 112,342 | 109,202 | 111,492 | ||||||||||||
| Weighted-average shares outstanding (diluted) | 114,118 | 115,010 | 113,573 | 114,781 | ||||||||||||
| (1) Stock-based compensation included above was classified as follows: | ||||||||||||||||
| Cost of product sales | $ | 232 | $ | 183 | $ | 911 | $ | 853 | ||||||||
| Cost of services | 41 | 51 | 148 | 177 | ||||||||||||
| Selling, general and administrative | 3,875 | 4,110 | 15,334 | 17,267 | ||||||||||||
| Research and development | 936 | 1,136 | 3,448 | 4,413 | ||||||||||||
| DOLBY LABORATORIES, INC. | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| September 28, 2007 | September 26, 2008 | |||||
| (unaudited) | ||||||
| (in thousands) | ||||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 368,467 | $ | 394,761 | ||
| Short-term investments | 231,217 | 119,667 | ||||
| Accounts receivable, net | 28,165 | 27,650 | ||||
| Inventories | 14,883 | 18,133 | ||||
| Deferred taxes | 73,686 | 91,824 | ||||
| Prepaid expenses and other current assets | 17,000 | 39,834 | ||||
| Total current assets | 733,418 | 691,869 | ||||
| Property, plant and equipment, net | 85,552 | 87,915 | ||||
| Intangible assets, net | 35,389 | 83,060 | ||||
| Goodwill | 39,364 | 250,356 | ||||
| Long-term investments | 73,224 | 180,996 | ||||
| Deferred taxes | 12,393 | 24,900 | ||||
| Other assets | 12,357 | 17,050 | ||||
| Total assets | $ | 991,697 | $ | 1,336,146 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable and accrued liabilities | $ | 119,068 | $ | 156,925 | ||
| Income taxes payable | 9,051 | 4,811 | ||||
| Current portion of long-term debt | 1,563 | 1,593 | ||||
| Deferred revenue | 13,522 | 37,344 | ||||
| Total current liabilities | 143,204 | 200,673 | ||||
| Long-term debt | 9,691 | 7,782 | ||||
| Long-term deferred revenue | 5,073 | 6,171 | ||||
| Deferred taxes | - | 16,755 | ||||
| Other non-current liabilities | 14,294 | 33,414 | ||||
| Total liabilities | 172,262 | 264,795 | ||||
| Controlling interest | 22,279 | 22,098 | ||||
| Stockholders' equity: | ||||||
| Class A common stock | 49 | 52 | ||||
| Class B common stock | 61 | 60 | ||||
| Additional paid-in capital | 375,830 | 434,907 | ||||
| Retained earnings | 409,749 | 609,495 | ||||
| Accumulated other comprehensive income | 11,467 | 4,739 | ||||
| Total stockholders' equity | 797,156 | 1,049,253 | ||||
| Total liabilities and stockholders' equity | $ | 991,697 | $ | 1,336,146 | ||
Contacts:
Alex Hughes, 415-645-4572 (Investors)
investor@dolby.com
Jeanne
Alford, 415-645-5000 (Media)
news@dolby.com
